Standardizing Service Processes through Lean: Is It Unthinkable?
Through this column I thought to share my own views on standardization while leaning service processes. This is based on what I have successfully been adopting over the years while facilitating Lean transformation. It has delivered results, and the gains have been sustained over a period of time.
Is Standardization in Services Required?
Yes, standardization is required in services. It is the foundation for meeting the requirements of customers and other stakeholders such as regulators, the community, etc. It not only brings about consistency in customer outcomes but also ensures better productivity. As a matter of fact, without standard processes, do you think businesses such as financial services, healthcare and food-services could survive and also meet regulatory requirements? A successful Lean adoption should see these standard work procedures being generated by the teams who run them and will later be involved in using them. Of course, sometimes (in businesses such as financial services) you would also need participation of members from other specialized functions such as legal, actuary, compliance, technology, etc. Getting an organizational bottom-up involvement in processes is not easy and takes time to get it right, especially when there has been a culture of pushing down processes from the top. But leaning an organization is about making it bereft of command-and-control, and the beginning has to be made.
For those who are new to Lean, Table 1 has been used to define a standard process.
|What is standard work?|
It is the best known method of doing work that has been designed by the process team, keeping in mind the needs of the customers and best practices around us. Standard work is also called work procedure, standard operating procedure, etc.
For an organization implementing Lean, standard work should have the following attributes:
1. Should be developed and created by the team that knows and runs the process—should be mandated from the bottom-up and not top-down, which would involve a team disconnected from the process,
2. Should be made easy for the associate to carry out his job—cannot be another chart for display on the soft-board,
3. Should be defined in detail without getting verbose—pictorial depictions yield the best results,
4. Should help to identify and track problems,
5. Should have gotten rid of non-value added activity and complexities,
6. Should help in educating new employees.
Does Standardization Generate Waste in Services?
It is not correct to say that standardization generates waste in service processes. Standardization is required but cannot be carried out in a mindless manner. Standardization in service businesses should be done based on the context and the complexion/type of processes that has been taken up for improvement. For example in a retail branch, the "DD" (demand-draft) or "cash" process can be standardized as this process is repetitive in nature. However, you cannot standardize a process that handles "queries." This is because this process handles queries, a majority of which could be different. So wherever you have processes that handle exceptions instead of standard queries, the teams should come up with broad set-of guidelines which customer-services executives can use. Standardization does not mean here that the customer services executives will become robots. Each of these processes (whether standardized or not) will have to be backed up by highly competent and empowered customer-services executives who are able to manage the interaction experience of customers. Of course, standardization will result in waste when you try it on a process that does not require standardization.
As a general rule, it may be a good idea to remember that there are two things that drive standardization: "Visibility" and "Variability in Transaction Type." Visible processes are those wherein the customer is involved and the process acts on them. In a "non-visible process" the information and material provided by the customer is worked on. In the former the quick response times and customer-interaction skills are critical, while in the latter there is a lag between customer request and delivery. Figure 1 summarizes this concept. I would recommend that before embarking on a Lean transformation, all processes should be placed on a scale like the one shown in Figure 1, and then you can make the decision to standardize or not standardize these processes. (Click on diagram to enlarge.)
Figure 1–Degree of Visibility and Process Standardization
A similar scale should be made for capturing "transaction variability" and its impact on standardization. This would help in taking decisions on branch processes such as "DD making" and "query" about which I discussed above.
Standardization as a concept is required in service processes. However, the degree of standardization has to be based on "transaction variability" and "visibility" of the processes. Yes, standardardized service processes must emerge from the bottom-up—from the team members who run, own and will be using these processes. I agree with Mark Graban that standardization in services is a spectrum.